This is a blog that I started in october 2010, mainly for discussing my ideas on the economy, taxation and politics. Please add comments - I'll do my best to reply. If you are new, I would recommend watching one of my YouTube presentations (in French or English). You can download a fully indexed pdf version (over 800 pages) here.

3 Nov 2012

ECB and BIS transaction figures for the eurozone : Over €2 quadrillion in 2011

I've recently been using the numbers provided by the European Central Bank and the Bank for International Settlements to try and get some hard numbers on the levels of transactions within the Eurozone in 2011.

Last week, I came up with a figure of just over €1.6 quadrillion based on the ECB's numbers. That's already pretty impressive. But I was intrigued when I noted that the BIS's figures for just five of the 17 eurozone countries (Germany, France, Belgium, Italy and the Netherlands) already topped €1.7 quadrillion.

So, what accounts for the differences?

Well, one reassuring point is that the numbers provided by the ECB for "Payment and terminal transactions using non-MFIs"(which includes "Credit Transfers", "Direct Debits", "Card payments", "E-money payments", "Cheques" and "Other payment instruments") exactly match the numbers provided by the BIS in their Table 8. And the 5 countries between them account for nearly 82% of the transactions in the entire eurozone.

Both the ECB and BIS provide numbers for TARGET payments, and for France, Italy and the Netherlands, the numbers match well. However, for both Germany and Belgium the ECB figures differ - the ECB figures for Belgium are 23% higher, whereas for Germany it is the BIS that comes up with a higher number (by about 20%). Oh well. But again, the five countries make up about 82% of the eurozone total.

The other sets of figures are harder to match up, and the decisions about where to put them seems to vary from country to country. For example, for France, Italy, Germany and Belgium, the BIS figure in Table 26 and the ECB's numbers for "Securities Settlements" match up perfectly. But only Belgium's numbers in Table 18 of the BIS dataset match the ECB figures for "Securities Exchanges".

When everything is added up, France, Belgium and the Netherlands look fairly similar in the two databases. However, as you can see in the table, the total figures for Germany are over twice as large in the BIS dataset. This huge difference is due to two major components that don't seem to have made it into the ECB data. First there is roughly €238 trillion handled by Eurex Clearing AG (see Table 21 of the BIS data). Then there is an additional sum of over €107 trillion of derivatives trades, also handled by Eurex which is mentioned in Table 18 of the BIS dataset. Perhaps someone could mention to the ECB that there are an additional €340 trillion in trading happening in front of their noses that they might like to include in their figures?

There is also a big hole in the ECB figures in the case of Italy, where the BIS figures are 55% higher than those provided by the ECB. In this case the difference seems to be mainly due to numbers that appear in the BIS data set in Table 21 under LCH.Clearnet SA (which did €27.8 trillion in securities transactions) and something called CCG which did nearly €23 trillion of securities transactions and exchange-traded derivatives.

Of course, none of these differences can really be regarded as surprising. After all, both the ECB and BIS make it very clear that they are only reporting numbers for "selected" partners. In other words, there is no guarantee that there are not vast amounts of trading going on that somehow never get mentioned - like the hundreds of trillions of pounds worth of trading handled by LCH.Clearnet Ltd that never gets reported.

It looks like BIS does a better job than the ECB at getting the fullest information. And who knows, maybe the total for Spanish transactions provided by the ECB (€215 trillion) might also be a lot higher if more was included. And the other eurozone country that would be very interesting to check on more closely is Luxembourg. According to the ECB, the country handled just over €90 trillion in 2011, but who knows, maybe the real number could be a lot larger.

Nevertheless, it is clear that if we add the €1.7 quadrillion reported
by BIS for just five countries, and the €355 trillion that the ECB
reports for the other 12 eurozone countries, we already have a very
healthy looking total of €2.07 quadrillion in transactions.

Now, let's see. 0.1% of €2.07 quadrillion is over €2 trillion. Why are Europe's politicians not salivating at the prospect of getting their hands on some of that lot? All it needs is a modest Financial Transaction Tax and life would be very very different....